Transaction insurance underwriting and the terrifying unknown

By Josh Bradford on April 25, 2017

NEW YORK—Underwriters can get comfortable with known issues in transaction insurance underwriting, but nothing is scarier than the unknown. This was the consensus of a panel of experts discussing M&A due diligence at Advisen’s Transaction Insurance Insights Conference in New York on April 20.

The panel said the explosion of representations and warranties insurance usage over the past few years has had an overall positive impact on the underwriting of deals.

“Because of the growth of the industry there is now a better understanding of our process,” said Jay Rittberg, managing principal, Euclid Transactional, LLC. “I think clients, brokers, and lawyers really have a good feel for what we are trying to accomplish through representations and warranties insurance due diligence underwriting. They have a sense that we are trying to find a good process, known issues, and that we are going to try to provide as broad coverage as possible.”

A recurring question throughout the day was whether the availability of transaction insurance was impacting due diligence behavior.

“What keeps us [underwriters] up a night is making sure that diligence isn’t changing with the products,” said Kim Gladney, managing director – North America, Abridge Partners LLC. “What’s helped with that to some extent is that the insurance is still only covering a small portion of the deal. I don’t think that’s going to change people’s behavior but that’s our job to make sure that the diligence is matching up with what the company does.”

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This story in an excerpt of the original. The content originally appeared in Professional Front Page News.
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Josh is an Editor at Advisen in the Research & Editorial division. He is the lead editor responsible for several of Advisen’s Front Page News editions and he also originates custom research on behalf of Advisen’s largest insurance company clients. Contact Josh at jbradford@advisen.com.